Buying Guides

Incisive Business Guide To Single Invoice Finance

This guide from Incisive Business outlines the features and
benefits for your business from using single invoice finance
services.

Single invoice finance can be used as an alternative to
factoring or invoice discounting.

What is Single Invoice
Finance?

Single invoice finance, also known as Single Invoice Funding,
Selective Invoice Finance or Spot Factoring, is similar to
factoring in that a business can use debtor's invoices (the sales
ledger) as assets. The business uses these assets to raise
finance against the value of its invoices. Unlike factoring,
single invoice finance facilities will be offered on an
invoice-by-invoice basis and consequently can be used as frequently
or infrequently as the business requires.

Single invoice finance gives a company
greater control over their business working capital
requirements. Where a business wins a new client but
requires additional materials to fulfil the order or where they
find an opportunity to purchase new machinery or equipment which
would greatly benefit the business but they don't have enough
finance readily available - then single invoice finance can be used
to provide that immediate cash injection to help make the most of
these opportunities. Additionally where a business is faced
with an unexpected bill, such as VAT, Corporation Tax or simply
repairs to equipment, single invoice finance may be the ideal
solution.

Single invoice finance gives a
business quick and straightforward access to funds on a
short-term basis and has flexible terms. Once a facility has
been set up with a single invoice finance company the business will
only pay when the service used.

How Can Single Invoice Finance Benefit A
Company?

Quick access to capital

Single invoice finance is a simple and fast process, which
enable a business to get immediate access to working capital when
they need it most.

No long-term commitment

Unlike with factoring; single invoice finance does not require
the business to commit the whole sales ledger into the contract.
Where finance is obtained using single invoice finance, once
the customer has paid there's no further financial commitment
between the business and the invoice finance company. However
the single invoice finance facility remains in place and can be
quickly used again should the company wish to raise finance again
at a later date.

The importance of customer
relationships

When using single invoice finance the business is responsible
for collecting the invoice values. This helps maintain the
relationship between the business and its customer while ensuring
that the agreed invoice finance facility is confidential between
the business and the single invoice finance facilitator.

Part of a financial portfolio for
business finance

Single invoice finance can be used in conjunction with other
facilities already in place, including lending and overdraft
facilities, but with the knowledge that it can be switched on and
off, as cash flow requirements change, with no additional costs
incurred when it's not being used.

How Single Invoice Finance
Works

Once the single invoice finance facility has been agreed and the
facility is in place, a new bank account is set up by the invoice
finance facilitator in the name of the business.

The Single Invoice Finance
Process

1. An invoice is raised by the business as usual and sent
to the customer. The invoice will have the payment details of the
new bank account.

2. The single invoice finance company will confirm that
the relevant products or service has been provided to the
customer.

3. The single invoice finance provider will then advance
the agreed percentage of the invoice value. The
percentage agreed will vary depending on various criteria which
will be discussed when setting up the facility. The criteria
will include the credit worthiness of the business'
customers. It is important to note that not all invoices will
be eligible for single invoice finance and it is vital to clarify
what invoices the business can and can't submit for
finance.

4. When the invoice is due the business will use their own
internal credit management process to contact the customer to
ensure the invoice is paid on time. Some single invoice
finance companies can offer assistance if the business has
difficulties collecting and this is something that should be
discussed when setting up the facility.

5. The customer pays the invoice directly into the new
bank account set up by the single invoice finance facilitator

6. Based on the amount paid by the customer, the single
invoice finance company will debit the original advance and
together with the fees agreed and the remaining balance is paid
back to the business.

Single Invoice Finance - An
Example.

The business receiving single invoice finance issues an invoice
to their customer with new bank details as set-up in the finance
agreement:

Invoice value = £1,000

The single invoice finance company pays 80% to the business'
existing (old) bank account:

Payment = £800

Customer pays the invoice into the new bank account: Customer
payment = £1,000

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